Industry fears exports may continue to fall in April as major sectors lag

Industry fears a continuing contraction in April exports, figures for which are set to be released later in the day.

March exports had contracted by 0.66 per cent, registering a decline for the first time in five months. Leading up to that, the growth rate had slipped continuously, coming down to 4.48 per cent in February, from a peak of 30.5 per cent in November.

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The fall is attributed most to contraction in major sectors such as refinery products, gems & jewellery and textiles, but managed to cross the $300-billion target for the first time in two years in 2017-18. "Though the global scenario reflecting forecast for global trade by WTO in 2018 at 4.4 percent and may moderate to four per cent during 2019 shows encouraging scenario for global exports, however trade tensions may pose challenges for exports." Ganesh Kr Gupta, President of the Federation of Indian Exports Organization (FIEO) said.

"The pace of exports of gems and jewellery in April is expected to be muted as the sector continues to suffer from a availability of funding from banks in the aftermath of the Nirav Modi fraud", a senior functionary of the Gems and Jewellery Export Promotion Council (GJEPC) said.

Also, volatility in the refinery products segment, which contracted 13.22 per cent in March after a 27.44 per cent rise in February is set to continue.

Another sector which has continued to perfrom badly is textiles with apparels being hard hit. "At present, the Industry is going through a tough period with its competitiveness greatly eroded. This is reflected in the unprecedented month on month decline in the apparel exports every month after October 2017," H K L Magu, Chairman, Apparel Export Promotion Council said.

The extension in MEIS scheme has given us a breather and sanction of our request to ensure that all embedded, non reimbursed central and state levies be refunded which will help in restoring the competitiveness of Indian exports, he added.

Moreover, the export growth has not been able to keep pace with import growth, which for the month of March, 2018 showed a growth of 7.15 percent against export growth of minus 0.66 per cent, leading the trade deficit for the fiscal to well surpass the billion-dollar mark.

"With the expansion in imports nearly twice as high as export growth in FY2018, the merchandise trade deficit widened by 44 per cent in the just-concluded fiscal. Icra expects the current account deficit to more than triple to $47-50 billion (approx 1.9 per cent of GDP) in FY2018 from $15 billion in FY2017," Aditi Nayar, Principal Economist at Icra said.

With the high 20.3 per cent growth in services exports being overshadowed by the sharp 40.2 per cent expansion in services imports, the services surplus declined to a four-month low $5.6 billion in February 2018, she added.